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The world’s biggest climate-finance alliance has launched a public consultation on its guidance for financial institutions and others working to accelerate the managed phaseout of coal power in Asia.
The region’s largest economies are highly dependent on coal, with the dirtiest fossil fuel accounting for roughly 60% of power generation. Ending this reliance is crucial for the world to hit climate targets, and lies at the heart of efforts like the Just Energy Transition Partnerships.
But finance to date has struggled to overcome a lack of transparency and “leakage” — the risk that shutting one plant simply pushes up emissions elsewhere. Most big financial institutions have restrictions if not outright prohibitions on coal investments, even for early retirements.
“If you’re a financial institution the easiest thing to do is of course, to expand your portfolio of green projects,” said Ravi Menon, managing director of the Monetary Authority of Singapore and chairman of the GFANZ APAC Network Advisory Board. “That is not going to solve the net zero problem because we’re not going to stop the emissions from coal plants. We are embracing coal to strangle it.”
In its guidelines released Monday, the Asia Pacific chapter of the Glasgow Financial Alliance for Net Zero included a three-step process for coal phaseout plans that first advises stakeholders to ensure the credibility of energy transition blueprints at all levels — from the government to the project — then to focus on meaningful outcomes in climate, financial and socio-economic terms, and then to provide transparency and accountability.
GFANZ, which brings together over 500 finance firms managing trillions of dollars of assets, has invited comments until August 4. The final report is expected to be released ahead of the UN Climate Change Conference at the end of the year.
(By Sheryl Tian Tong Lee, with assistance from Clara Ferreira Marques)
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